24. How do you react to price shock?
The best story I have ever heard about price shock is from a buyer who claimed he could get a sales person to lower their price without saying a word. He said he was able to perfect his “price shock” strategy by practicing on his way to work every morning.
What exactly is "price shock?" It is a simple facial expression that says, "Your price is high!" Well-trained buyers are taught to use this strategy with exact precision.
When a buyer or customer is looking at your initial price they are taught to wrinkle their forehead as if to say "you are much higher than I expected!" This is designed to immediately put you, the presenter, on the defensive. The sad part is, it works most of the time. Even if you have a close relationship with the buyer, you may misread it as a sign that you should lower your price to get, or keep, the business.
Work on your own price shock until you can perfect it. Every time you buy something act surprised at the price. Watch closely how the seller reacts. If you are buying a new house, tell the realtor you are shocked by the price. When you are in the market for a new car, try it on the car sales person. When you buy a new TV, tell the clerk you are shocked at how much the price is.
To become an expert at how effective price shock is you should practice your own unique style for acting surprised every time a price in presented to you. Whenever you are given a price on anything, act surprised – watch carefully how they respond. Simply say “the price is too high”, or “I am sure this is a nice hotel, however, your price is high”, or “I was thinking about buying a new boat, however, your price is too high!”
Here's a great example. A large horse trailer dealership in Dallas was setting up a meeting for all their sales and management people and needed to book a large block of hotel rooms. This was right after they attended my seminar and they decided to give it a try. He called me and said the results were amazing. The savings was $2,500. Not bad for a little theatrics.
Do I use this strategy – absolutely – I use it every time I am presented with a price! I stay in many hotels during the course of a year. Does price shock save me money? One hundred hotel rooms x $10 average savings = $1,000 per year! And right now one thousand dollars is a good thing.
When I check in I ask for the price – act shocked – pull out my deck of discount cards – act shocked at the discount price and get a lower price than the lowest discount.
Some people are embarassed to try this. Fine. Maybe you should try something else to do for a living besides selling. Our job is to ASK FOR THINGS and if your are embarassed to ask, you will be just as timid about asking for an order. Plus, you will never know how to react when people are shocked at YOUR price. And don't kid yourself - they will be!
What about when someone is shocked at YOUR PRICE? What should your reaction be? There are five responses you can use to counter this powerful strategy:
1. You can be weak, give in, and lower your price. They won. This is what most buyers and customers expect, especially from an amateur sales person.
2. You can be shocked at their shock. This is designed to neutralize the strategy. The customer is shocked at your price; you are shocked at their shock. Seems a little strange to use at first, until you see how well it works. This throws the shock right back at the buyer and you have now put the buyer on the defensive. Then stay silent. Do not provide an explanation. It is the buyer's turn to make the next move! This is so effective you will have a hard time keeping a straight face. Role play this and get it down to a science.
3. You can use the "Feel, Felt, Found" reply. Here is how it works: "I understand why you feel that way, everyone I talked to so far today felt the same way, until they found out that the market has gone up since last week.”
4. You can justify your price rather that discount it. This is an extension of number three. "I understand why you might feel that way, everyone I talked to today felt the same way, until they found out what is included in that price.” And then begin to list the additional benefits that are included, which makes the price seem smaller and smaller.
5. Fork in the road. There is a response called a "fork in the road" that sometimes works on price shock:
"Our company came to a fork in the road and had to make a choice on whether to be a low cost, no service, no frills type of company, or to be one that provides services, follow up and extra benefits. We chose the latter. One other thing to consider Mr. Prospect, you get me. I go with the deal - and if you don't think I can make a difference - try me."
Bottom line - There are plenty of folks who want to buy just on price and the sales people who sell them could be replaced with an email.
Comments:
"I have always felt like when the sales person responds in silence to my initial shock, I am left questioning the reason for my shock. It somehow makes me think that since the person is silent, they are standing firm in their price and are confident that it is reasonable. Silence can be a VERY powerful thing. In my assumption that I was wrong for being shocked, I paid what the sales person was asking. Now that I am on the other end I see what an EASY sale I would have been. I like the idea of seeming shocked at their shock, why would my product be cheaper? I do offer the best value and quality for my price. Should we lower the quality or value? Of course not so why would we sell it for less?? My company is worth it, and I am worth it."
Brooke Knight
Whenever possible, don't discuss price until you've discussed the validity of your pricing. If forced to give a price prematurely, only offer a range. Ask questions that will help you understand what the client want. Always add 10 to 20 percent to your high end. It's a lot easier to go back with a lower price than a higher one. If the customer is going to choke on your artificially high price, he'll choke on your real top end price, and you'll lose the advantage of being able to quote a final price that is lower than he expected.
Yessie Narvaez
I try to avoid the “Shock” effect altogether. I believe in managing expectations up front. 1st I find out if they have used a similar service in the past; if not I walk them through the process and briefly mention the cost (giving a wide range). This should prepare the person for negotiations. If they try to use the “Shock” effect – don’t flinch. Counter with the “Triangular negotiation” method. Here you are negotiating three different variables; if you change one side- I change another side. So no matter what type of triangle you end up with (right, acute, obtuse, equilateral, isosceles or scalene) its still a TRIANGLE.
A win-win-win for every one,
Teresa Cloninger
"I never thought of reacting to shock with shock---I always thought I had to explain why or "attempt to get a lower price". It works though...I tried it by simply saying "REALLY!!" with a bit of shock on my face and said nothing else....He bought the product and we moved on like nothing happened."
Ken Jones
I actually used the shocked approach yesterday when it was tried on me - IT WORKED!
I said that the previous person had the same shock when they saw the price of the meat slicer, but when I explained that I came along with the deal for service, and explained how the unit would assist with profitability, and that I helped them save alot by directing them to the unit they need to fit their needs... they found that the price was great, and purchased immediately. We got to the 'fork in the road' moment, where I thought I might lose the sale, and went silent. They were a little thrown off, and about ten long seconds later, they asked for the slicer to be boxed up, and asked if I could assist them in finding the rest of the wish list they were carrying. That was a big sale, and an especially happy customer.
Craig Young
Price shock immediately gives you a sense of guilt, which you have to learn to overcome right away and be ready with a come back. A lot of buyers are shocked at the price because they do not understand the quallity of the product such as a home use item compared to a commercial item. Our job is to convince the buyer that it is the right product for their needs, and a good value for their money.
Jordan de la Morandiere
"Be shocked at their price shock. This is designed to neutralize the strategy. The customer is shocked at your price; you are shocked at their shock."